1) Earthquake is not covered by standard property insurance policies.
2) Earthquake insurance is available in every county in the US (its just more expensive in some places).
3) Earthquake is the single most uninsured catastrophic exposure for most businesses.
4) I don't understand why all businesses do not buy earthquake insurance.
What do you do when a service you depend upon evaporates?
Think of all the parts to your business. Think of the suppliers, vendors, services, contractors, and other cogs that mix together to create the value that is your business.
--You lose your electricity. What do you do?
--You lose your water supply. What do you do?
--Your key supplier sends an email that they are going out of business. What do you do?
I faced a similar situation last week. A software system I had grown dependent on announced that they were bought out by Twitter and that the service I used may be discontinued. Luckily, they gave me notice so that I could search out a new service.
Had they just turned out the lights, I would have been OK as I keep backups. It has got me thinking though.
How about your business? Were can you build redundancies?
Some employees steal. How do you identify those most likely to steal from you?
CAMICO Mutual Insurance is a specialty insurer for accountants. I recently listened to an excellent podcast by Ron Klein, J.D., CFE, Vice President-Claims Counsel, that covers the basics.
Go Here For CAMICO's Podcast Page - go about 2/3 of the way down the page for the high risk employee podcast. You can listen to it right at your computer.
I read about ten insurance newsletters a day so I can keep up with what's going on.
This morning the AM Best news had a piece that New Hampshire has banned STOLI.
To me, STOLI is a bread pastry that my brother-in-law prepares every Christmas, and he is from New Hampshire. The AM Best news worried me as his STOLI is one of my favorite parts of Christmas.
Turns out STOLI is "stranger owned life insurance." As I spend little time in the world of life, I had never heard of this. (When anyone comes to me with big life insurance questions I send them to my compatriot, Glenn Daily, who has forgotten more about life insurance than I have ever known.)
Well, STOLI is high finance. Even to getting TV guy Larry King sucked in.
Investors convince wealthy old folks to buy big life insurance policies and then flip them for payouts. Larry is not so happy with his $1.4 million payday.
Kiplinger's story here.
Who knew?
I bought pet insurance the other day.
It dawned on me that if our 1 year old puppy got sick, the Empress (my wife) would, without pause, spend $10,000 on a cure. Knowing myself as I do, I would have a problem spending such money on "the beast."
Expressing financial concerns to the Empress when our dog was sick would quickly land me in the dog house with little hope of extrication - plus there would still be a vet bill.
So, for $250 a year I've protected myself from being the heal. Pretty smart, hu!
Here are the variables I found in pet insurance policies:
Every insurance company should post every policy form on the Internet - every policy form and every endorsement. Every application form too.
These are not state secrets.
For you green-ees out there, how about giving insureds the option of getting policies by pdf file? Save a few trees (if you're so inclined).
Now I realize that my life is different from most out there. I deal with hundreds of insurance buyers, well over 2,000 policies, multiple agents, and multiple insurers.
It sure would be nice to be able to get easy access to policy forms without having to ask agents, who ask underwriters, who ask clerks, who ultimately send it to the agent, who sends it to me.
While I'm reshaping the insurance world...
Why not print line numbers on insurance policies so when we are discussing coverage its easy to be at the same place? The old fire policy has numbered lines. Why not the new CGL?
How about more coverage examples within policies? Chubb started doing that in the 1980s.
How about policies without 150 endorsements? Why not just update the policy forms. It's not like anyone is going to a print shop to have these things printed out.
How about spitting out multiple options when you generate a quote? How about a proposal from an insurance company that actually suggests coverages to consider? "Why not consider blanket property insurance? The extra premium is $xxx."
Why do I have to ask for $1,000 deductible, $2,500, $5,000 and $10,000?
Why not just quote a $5m, $10m, and $15m umbrella automatically?
Instead of just quoting $250,000 of employee dishonesty coverage, why not go ahead and quote options to $1,000,000 with 5 different deductibles?
The world of insurance does not need to be mysterious. Put information out there and let your customers decide.
I am in the middle of a dozen or so bid projects. The results are coming in.
To the agents out there. Yelling at me when you lose does not make me want to do business with you.
I don't think you are cool and I am not intimidated. I will give you some information but realize that your pissy attitude does not help your case at all.
The buying decision is made for many reasons. Price and coverage are a part of the equation. Relationships are important too.
If you are an agent and on the losing end of the equation, have some grace.
I often try to negotiate a rate agreement when I am working through an insurance renewal bid project for a client. I want an agreement with the underwriter that the renewals are going to be handled in the same "Spirit" as the bid.
Here is a response one underwriter gave:
"Our methodology would be the fact we have our Accelerated Renewal program where our clients who qualify are given the opportunity to agree on renewal terms well in advance of the renewal date.
"This process can assist our clients need to budget for their insurance expenditures well in advance of the actual renewal date. We can negotiate our rate need (plus or minus) based on loss experience over the policy year or the industry trending at that time.
This program allows us to process the renewal based on expiring/endorsed exposures without the client providing applications and/or supplements."
This is a fine compromise. We get to know renewal pricing early so that we can decide what to do - stay with the carrier or seek alternative proposals. Fair enough.
Renting a car? Buy collision damage waiver insurance offered by the rental car company. After an accident you want to toss the keys on the rental car counter saying, "See you around boys!"
Doing anything else will lead to hassles far in excess of the $20 a day you'll pay for the insurance.
I'm starting to ask property insurers to offer coverage to pay to replace a non-green building with a green building, after an insured loss.
Most "main-line" insurers are not offering this yet. They will, if enough people ask for it.
I work with a great many banks, helping them buy and manage insurance.
Today I reviewed a new policy for a client. It's a policy from a new bank insurer, FinSecure.
I have long railed about the cancellation provision in all bonds that ends a bank's insurance coverage when a bank officer learns of a past dishonest act of an employee.
So, ABC Bank's CFO is having lunch with a 45 year old teller who has won employee of the month. During the conversation, the employee reveals that at 15 he stole a fishing lure from a sporting goods store.
At that moment, coverage for dishonest acts by that employee stops. If, a month later, it is found that the teller has stolen from the bank, coverage will be excluded.
FinSecure is a new insurer, part of the Berkley Group. Their bond limits the exclusion to dishonest acts prior to employment, not related to their employment, where the amount in question is less than $2,500.
Bravo FinSecure!
Other insurance companies take notice.
Two ways most insurance policies value property...
Replacement cost is the cost to buy the item lost new. Its the cost to rebuild the building with current cost of materials and the current cost of labor.
Actual cash value (ACV) is usually defined as replacement cost minus depreciation. It also can be thought of as the market value of an item.
The replacement cost of a 4 year old TV may be $1,500 while the actual cash value may be only $100.
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Scott lives in Maine and runs a successful consulting firm. He has worked with over 1,500 businesses in his 30 year career.
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